Deirdre M. Daly, United States Attorney for the District of Connecticut, and Daniel J. Kumor, Special Agent in Charge of the ATF Boston Field Division, announced that STAG ARMS LLC, a firearms manufacturer in New Britain, and its former owner and president, MARK MALKOWSKI of Farmington, were sentenced today in Hartford federal court. Senior U.S. District Judge Alfred V. Covello ordered STAG ARMS to pay a $500,000 fine and MALKOWSKI to serve two years of probation and pay a $100,000 fine.

In December 2015, STAG ARMS pleaded guilty to a felony charge of possession of a machine gun not registered to the company, and MALKOWSKI pleaded guilty in his individual capacity to a misdemeanor charge of failure to maintain proper firearm records.

“This is the first time nationwide that a major firearms manufacturer has been convicted of a felony and had its license revoked, effectively forcing the company to be sold to new owners,” said U.S. Attorney Daly. “Stag displayed a systemic and egregious disregard of federal firearms regulations. The company was unable to account for hundreds of semi-automatic rifles and possessed over sixty unregistered machine guns. This prosecution should serve as a warning to those in positions of leadership in the firearms manufacturing industry that failure to maintain strict compliance with firearms laws will have serious consequences. By properly marking and serializing firearms, accurately maintaining records in conformity with the Gun Control Act and properly registering firearms, gun manufacturers act as the first line of defense in ensuring that firearms are traceable and do not fall into the wrong hands.”

“ATF relies on individuals and corporations who are licensed to manufacture firearms to mark them in accordance with the law, keep thorough records of the manufacture and disposition of all firearms, and maintain their inventory in secure facilities to prevent their theft or loss,” said ATF Special Agent in Charge Kumor. “When firearms licensees fail to comply with these federal regulations and laws they open the door for untraceable firearms to wind up on the street in the hands of traffickers and criminals.”

The possession, by private citizens, of machine guns manufactured after 1986 is prohibited, and licensed manufacturers of machine guns are required to stamp a unique serial number on each machine gun and register it with ATF within one business day of manufacture. It is a violation of federal law for a licensed manufacturer to fail to mark a firearm with a serial number and for anyone to tamper with a firearm serial number or possess a firearm with an obliterated serial number. It is also against the law for anyone to possess a machine gun that is not registered to them.

According to court documents and statements made in court, STAG ARMS (“STAG”) obtained a federal firearms license (“FFL”) to manufacture firearms in 2003, and obtained a license for a second location in 2009.

In 2007, the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) cited STAG for a number of regulatory violations.

In July 2014, ATF Industry Operations Investigators performed another firearms compliance inspection at STAG. The investigation revealed that, in violation of the National Firearms Act, STAG had possession of a total of 62 machine guns and machine gun receivers that were registered to another entity, or were not registered at all.

A receiver is the key regulated part that is considered a machine gun. All other parts necessary to transform a receiver to a fully functional semi-automatic or automatic machine gun can be purchased over the Internet.

The investigation also discovered that, in violation of the Gun Control Act, STAG had failed in thousands of instances to adequately document the manufacture and disposition of firearms – machine guns as well as assault weapons – making them more susceptible to theft or loss. Many of the record-keeping violations that were uncovered were similar to violations for which STAG was cited in 2007. For example, inspectors discovered more than 3000 un-serialized receivers on the premises without any record of their manufacture or acquisition, and more than 3000 firearms that were transferred by STAG without properly being recorded. Inspectors were able to reconcile the majority of these transfers from other paperwork on site, but found more than 300 instances in which the disposition of the firearms could not be reconciled. To date, approximately 200 firearms are reported as lost or stolen.

In September 2014, ATF executed search warrants at STAG’s two facilities on John Downey Drive in New Britain and seized dozens of machine guns that had not been marked and/or registered, as well as three machine guns with serial numbers that had been intentionally obliterated, or scratched out.

In October 2014, ATF issued a Notice of Revocation to STAG, revoking both federal firearms licenses held by STAG at it two facilities. In the revocation notices, ATF alleged that STAG had knowledge of its recordkeeping and firearms marking responsibilities, but did not choose to comply. STAG was permitted to continue operations pending the results of a hearing where STAG was afforded the opportunity to contest the revocations with its own witnesses and evidence, and to cross examine government witnesses.

On November 16, 2015, after consideration of the evidence presented at the hearing, ATF issued a revocation of both of STAG’s federal firearms licenses.

Due its license revocation, on February 29, 2016, a sale of STAG was completed to an independent third party and the company is now under new ownership.

As part of the resolution of this case, STAG agreed not to challenge the license revocations in court, and to drop all ownership claims to the firearms seized by ATF. In addition, MALKOWSKI divested himself of his interest in STAG and has agreed never again to hold an ownership or management position with respect to a firearms business.

This matter is being prosecuted by Assistant U.S. Attorney S. Dave Vatti.